Meanwhile, some fees charged by brokers have remained the same as have commission and procuration fees. While the higher volume of business and raised property prices may have provided a boost to earnings, advisers are arguably working harder for their money.
So this week, Mortgage Solutions is asking: Could there be a restructuring of procuration fees, commission and broker fees to better reflect the work that goes into each case?
Looking at fees, this can be quite subjective. There is probably more of an argument now for upfront broker fees to be charged at point of application, as criteria has seen fundamental changes due to pandemic and impact to the economy. This has required a lot more research in lender selection to obtain the best overall deal that meets criteria, than ever before.
Our business model is different as we specialise in complex credit cases, and we charge standard fees on mortgage offer or on completion, so a lot of front-end work is undertaken at our cost.
We don’t think it is fair to charge a client a fee if a case cannot be placed without a successful outcome.
As an industry, we do believe our broker fees should be in line with what solicitors’ legal fees would cost. The more complex the case the higher the fee.
As for procuration fees, it would be great if there could be an increase as standard procuration fees have remained fairly constant for many years now, particularly among the high street lenders.
I appreciate lenders have seen margins slashed, largely down to the pandemic, however with this year’s potential emergence out of Covid and record business volumes being written for the majority of lenders, in some cases historic highs, then a review of procuration fees would be always welcome.
For me there are two parts to this; firstly, we are in an exceptional period and that has to be taken into account. Roll the clock back 18 months, no one saw Covid coming, all the knock-on impacts that is having and will have for some time to come.
Nor did anyone predict a roaring housing market, the likes of which we haven’t seen since 2007. Throw in a stamp duty deadline and limited capacity and yes, life is exceptionally hard work right now.
However, nothing lasts forever, and it will settle down as the year progresses and Covid restrictions ease – as remember, many banks still rely on international back office support which isn’t there at present.
Secondly, we are professional advisers and should charge for our time accordingly.
The very reason we charge a fee as a firm is that gives us the income to employ case managers which takes a lot of the burden away from both the clients and advisers so they can focus on what is important to them.
We have a flexible fee arrangement, so for complex, time consuming work, we charge more. For simpler work, we charge less or sometimes not even at all. It’s all about the work involved.
So if you aren’t being paid what you think you are due, charge more.
We justify any fee we charge five-fold and we have never had a client complain once they see the work involved on some cases.
Some lenders are very quick and efficient, other lenders are not so ‘user friendly’.
And the same goes with the conveyancers, valuers and of course, the quality of the brokers too.
We are not finding that the clients are the main problem, so really, why should we charge them more just because some of the cogs in the wheel are not as efficient as they used to be?
There is certainly a mix of mortgage adviser in the market, from those ‘fee-free’ salespeople who really just want to sell mortgages, to others who spend a lot more time carrying out full fact finds and properly advise on debt protection, family insurance, wills, trusts and other ancillary financial planning solutions too.
I see the argument that where some lenders are selected by the client, that maybe we should consider charging more because the processing from these slower lenders could mean twice as much work.
It could equate to spending 10 hours on one mortgage with a £500 fee, but this is ‘turnover’ and not profit. So, what does the actual earnings really equate to for the individual broker after office, compliance, support and processing time costs are all factored in?
We are a business after all.
We find it really important to also focus on the lender service levels in order to ensure speedy application-to-offer processes, which helps all parties in time and money.